Risk-Taking Among Chinese Employees
By Frank Gallo
Chinese employees are often accused of not being willing to take risks and therefore fail to be innovative. And yet, many firms in China are trying to do new things and therefore require innovation. In my view, risk-taking behaviour in China is quite similar to other countries. I believe the reason that China has the reputation of not taking risks is because of a few cultural patterns. One is the fact that Chinese employees are generally not very quick to speak up. Westerners often see this behaviour as a sign of fear. I think however, it is more about caution and a very strong desire to get something “just right.” Getting something right is more important to most Chinese than being first.
The following two sayings are often used to show an apparent difference between Westerners and Chinese. “The early bird gets the worm” is a Western proverb that is taught to Western children from a very young age. The idea is that you are better off in life if you try something early. On the other hand, the Chinese proverb “Qiang da chu tou niao” (“The first bird out gets shot.”) implies a need to be cautious. But as noted, this does not mean that being early is unimportant. Rather, in my opinion, being early is secondary to being right. Furthermore, as I have written in earlier columns, Chinese employees tend to be deep thinkers and will do more preparation than Westerners before stating a position or taking a risk. Chinese also tend to see some Westerners as too fast-talking and too fast-acting. Most people in the world, including Americans, believe the current world economic crisis is the result of American investment bankers taking risks that they should not have.
Next to consider is the Chinese concept of “tao guang yang hui”, (hiding your capabilities) especially in State Owned Enterprises. While we do not see this often in private firms today, it is still quite common in SOEs. The more you show of yourself, the more likelihood that there will be a mistake. While this is a very old Chinese concept, it is still sometimes seen today as an example of why Chinese employees will not take risks.
During the past ten years or so, a sub-culture has arisen in China businesses, especially in multi-national firms. These people, mostly the younger population of workers, have become very westernized in their thinking. These people see the need for more innovation and risk-taking. Not encumbered by past history, but rather encouraged by their Western-thinking bosses to take risks, they are less afraid of failure than their predecessors. This is a good sign for China.
What Can be Done to Improve Innovation and Risk-Taking in Your Firm?
China is becoming more innovative than before. But leaders cannot allow too much time to pass before innovation and risk-taking are a significant part of the business culture. Here are a few best practices that will work in China.
- Make it clear that innovation is a requirement. Put innovation and risk-taking competencies as part of everyone’s development plans.
- Hire people who are risk-takers. Train your human resources staff to look for examples of innovation and risk-taking in the new hire interview. The presence of these competencies for a high tech firm is more important than the school that the candidate attended or the companies he or she worked for before.
- Reward people for innovations. I am not only talking about payments for patents of royalty payments. I am referring to a special program that empowers managers to grant bonuses to employees who take calculated risks, whether or not they bear fruit.
- Comfort people to know that there is no penalty for a mistake if made while trying to be innovative.
- Encourage the newest employees to take risks and to not feel shame if they do something wrong.
I have no doubt that the perceived lack of innovativeness in China will soon be a thing of the past. I remember very clearly when, forty years ago, as Japan was rebuilding its country and on the road to becoming an economic superpower, the idea of something with the label “Made in Japan” was a joke. It meant that the product was probably cheap, poorly made, and copied from somewhere else. Today, Japan is among the leaders in innovation from automobiles to appliances to high tech gadgetry. There is no question that the same fate will hold true for China. Until we are there however, it is the job of the business leader to prompt employees with the right programs and incentives to get there as quickly as possible. This will only help your company to be more successful and will guarantee your success as a leader.
Frank Gallo, Calypso Consulting
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June 10th, 2009 at 1:35 pm
Work environment determines the employees’ actions and innovations.If the boss is an innovationist,the employees will be innovative and risk-taking.
June 13th, 2009 at 1:26 am
I fully agreed that penalising a mistake would only suppress risk-taking and proactive approach of the staff. Many bosses are afraid of the risk of failure as they too encounter penalty from their superiors or stakeholders. The public is less forgiving for mistakes made by high ranking government officers or corporate senior executives. They are expected to be impeccable to lead. This mentality has cascaded down to the middle management.
I find it important that the manager should first outline the out-of-bound markers, rules and restrictions to the staff before embarking on the project launch. The scope and purpose of the operations must be fully and clearly explain to the staffs. In these ways, the staffs know where the limits are and would manage the project confidently with some risk takings. The Chinese will take risks once they have a good understanding and analysis of the situation.
There is also another factor that makes the staff less proactive. It is a common to find that the most able and talented staff is given the toughest or most assignments. This has discouraged staffs from stepping forward in fear of getting more tasks as the Chinese saying “能者多劳” (Neng Zhe Duo Lao – a capable guy will have more work). Thus most of the staffs are perceived less risk-taking with their docile behavior. The manager must be fair to allocate the assignments and courage enough to assign the tough jobs to less conspicuous staffs. In this way, the manager is developing more able and proactive staffs in his or her organization instead of relying on few capable staffs. The morale in the department will go up too.
June 14th, 2009 at 7:05 am
Even in multi-national firms, you can often see those people they fear to take risks. They don’t want to take the responsibilities they should! Most time this behavior will cause argument in short term and spoil team work in long term. The extremly case could be people tend to cover problems / mistakes rather than identify for root causes and take necessary preventive actions. Thank Frank Gallo, you give out lots of solutions helpful solutions from very beginning of recruitment to reward / recognition in the routine management. They are insightful! They are also what I hope to emphasize in my job – I call it a mind set change and culture shift.
June 20th, 2009 at 4:01 am
I like your opinion. Most of times Chinese people are slow to speak up does not mean they don’t understand or they don’t know how to do. They are thinking further way and even thinking about all kinds of risks faced in the coming future.